Salaried employees and retirees of U.S. Steel Canada Inc. have won the right to try to overturn a court decision that they argue will have an impact on where their pension plans would rank if the plans are wound up as part of the steel maker's restructuring.
The employees and retirees, who are among the stakeholder groups affected by U.S. Steel Canada's bankruptcy protection under the Companies' Creditors Arrangement Act, asked the Ontario Court of Appeal to let them intervene in another CCAA case involving Grant Forest Products Inc.
The appeal court has allowed them to intervene in an appeal of an Ontario Superior Court of Justice decision in the Grant case, although the higher court has taken the unusual step of permitting the USSC employees and retirees to intervene after arguments in the appeal have already been heard, in effect reopening the case to examine a different set of arguments.
"They say that the decision of this court in this appeal is expected to have a significant impact on the rights of the USSC pension plan members, both in the current restructuring negotiations and when the pension plans are wound up in a liquidation of USSC under the CCAA, if restructuring is not achievable," the three-member court of appeal said in its decision allowing the intervention.
The argument by the employees and retirees centres on what is known as a "deemed trust" under the Pension Benefits Act, which gives priority to an underfunded pension plan ahead of other claims against the assets of a company in a CCAA case.
Deemed trusts "are very important legal remedies for Ontario pension plan members in CCAA proceedings," the pension plan members argued in their request to the court of appeal to let them intervene.
They argued that the Superior Court ruling contained errors of law that need to be corrected by higher courts.
U.S. Steel Canada was granted CCAA protection in September, 2014, citing in part solvency deficiencies of $838-million in its four main pension plans, whose members include about 6,000 salaried employees and retirees.
"If a restructuring of USSC is not achievable and the pension plans are wound up in an underfunded state, there will not be enough assets in the plans to pay pension benefits at full amounts and pension benefits paid each month to plan members will be reduced," Patrick Mousseau, a representative of the salaried group, said in a court filing.
United States Steel Corp., parent of U.S. Steel Canada, is proposing to sell operations in Hamilton and Nanticoke, Ont., after piling up losses of $2.4-billion at the Canadian unit between 2008 and 2013.